UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________ TO ___________
COMMISSION FILE NUMBER 1-12290
PANAMERICAN BEVERAGES, INC.
(Exact name of registrant as specified in its charter)
Republic of Panama Not Applicable
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Panamco, L.L.C.
701 Waterford Way, Suite 800
Miami, Florida
(Address of Principal Executive Offices)
33126
(Zip Code)
Registrant's Telephone Number, including area code: (305) 856-7100
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares issued and outstanding of each of the registrant's
classes of common and preferred stock, par value $0.01 per share, as of
November 1, 2000 were:
Class A Common Stock: 119,770,095
Class B Common Stock: 8,962,470
Class C Preferred Stock: 2
<PAGE>
TABLE OF CONTENTS
Page
PART I FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets (unaudited) as of December
31, 1999 and September 30, 2000.................................... 1
Condensed Consolidated Statements of Operations (unaudited) for
the three and nine months ended September 30, 1999 and 2000....... 2
Condensed Consolidated Statements of Cash Flows (unaudited) for
the nine months ended September 30, 1999 and 2000................. 3
Notes to Condensed Consolidated Financial Statements
(unaudited)....................................................... 4
PANAMCO MEXICO - Selected Statements of Operations Data
(unaudited) for the three and nine months ended September 30,
1999 and 2000..................................................... 13
PANAMCO BRASIL - Selected Statements of Operations Data
(unaudited) for the three and nine months ended September 30,
1999 and 2000..................................................... 14
PANAMCO COLOMBIA - Selected Statements of Operations Data
(unaudited) for the three and nine months ended September 30,
1999 and 2000..................................................... 15
PANAMCO VENEZUELA -- Selected Statements of Operations Data
(unaudited) for the three and nine months ended September 30,
1999 and 2000..................................................... 16
PANAMCO CENTRAL AMERICA - Selected Statements of Operations Data
(unaudited) for the three and nine months ended September 30,
1999 and 2000..................................................... 17
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................. 18
Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.............................................................. 31
i
<PAGE>
PART II OTHER INFORMATION................................................. 31
Item 1. LEGAL PROCEEDINGS................................................. 31
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS......................... 31
Item 3. DEFAULTS UPON SENIOR SECURITIES................................... 31
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............... 31
Item 5. OTHER INFORMATION................................................. 31
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.................................. 32
Signatures.................................................................. 33
ii
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in thousands of U.S. dollars)
(Unaudited)
December 31, September 30,
ASSETS 1999 2000
------------ -------------
Current assets:
Cash and equivalents $ 152,648 $ 147,415
Accounts receivable, net 133,776 126,666
Inventories, net 122,978 117,317
Other 17,648 38,041
----------- -----------
Total current assets 427,050 429,439
Investments 215,129 188,614
Property, plant and equipment, net 1,218,383 1,159,919
Bottles and cases, net 310,856 273,138
Goodwill, net 1,292,414 1,268,082
Other assets, net 149,290 139,245
----------- -----------
$ 3,613,122 $ 3,458,437
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank loans $ 33,529 $ 50,837
Current portion of long-term debt 64,640 55,356
Accounts payable 152,230 169,606
Other current liabilities 145,019 161,834
----------- -----------
Total current liabilities 395,418 437,633
Long-term liabilities:
Long-term debt 1,249,972 1,167,153
Other long-term liabilities 187,862 185,501
----------- -----------
Total long-term liabilities 1,437,834 1,352,654
Minority interest in consolidated subsidiaries 27,974 29,209
Shareholders' equity:
Capital 1,481 1,481
Capital in excess of par value 1,584,787 1,585,114
Retained earnings 586,196 503,504
Accumulated other comprehensive loss (363,269) (382,172)
----------- -----------
1,809,195 1,707,927
Less - Treasury shares, at cost 57,299 68,986
----------- -----------
Total shareholders' equity 1,751,896 1,638,941
----------- -----------
$ 3,613,122 $ 3,458,437
=========== ===========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
1
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in thousands of U.S. dollars, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------------------------------
1999 2000 1999 2000
---------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 605,118 $ 648,180 $ 1,780,472 $ 1,897,422
Cost of sales, excluding depreciation
and amortization 296,239 304,922 877,470 903,856
---------------- ---------------- ----------------- -----------------
Gross profit 308,879 343,258 903,002 993,566
Operating expenses:
Selling, general and administrative 202,309 221,888 606,027 640,410
Depreciation and amortization,
excluding goodwill 53,951 56,869 161,606 171,937
Amortization of goodwill 9,066 9,344 27,243 27,543
Facilities reorganization charges 720 - 11,334 79,878
---------------- ---------------- ----------------- -----------------
266,046 288,101 806,210 919,768
---------------- ---------------- ----------------- -----------------
Operating income 42,833 55,157 96,792 73,798
Interest expense, net (23,089) (28,095) (69,905) (83,236)
Other expense, net (12,975) (5,738) (40,054) (18,067)
---------------- ---------------- ----------------- -----------------
Income (loss) before income taxes 6,769 21,324 (13,167) (27,505)
Income taxes 16,693 19,663 35,872 29,185
---------------- ---------------- ----------------- -----------------
Income (loss) before minority
interest (9,924) 1,661 (49,039) (56,690)
Minority interest in earnings of subsidiaries 1,054 1,197 2,482 2,824
---------------- ---------------- ----------------- -----------------
Net income (loss) $ (10,978) $ 464 $ (51,521) $ (59,514)
================ ================ ================= =================
Cash operating profit $ 105,850 $ 121,370 $ 285,641 $ 312,811
================ ================ ================= =================
Basic earnings (loss) per share $ (0.08) $ 0.00 $ (0.40) $ (0.46)
================ ================ ================= =================
Basic weighted average shares
outstanding, in thousands 129,705 128,733 129,691 128,869
================ ================ ================= =================
Diluted earnings (loss) per share $ (0.08) $ 0.00 $ (0.40) $ (0.46)
================ ================ ================= =================
Diluted weighted average shares
outstanding, in thousands 129,705 129,147 129,691 128,869
================ ================ ================= =================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
2
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------------------------
1999 2000
-------------------- --------------------
<S> <C> <C>
Net cash provided by operating activities $ 170,763 $ 207,938
Cash flows from investing activities:
Capital expenditures (149,098) (96,497)
Purchases of bottles and cases, net (46,318) (49,062)
Purchase of investments (152,935) (4,000)
Disposition of investments 542 25,000
Proceeds from sale of property, plant and equipment 22,172 17,713
Other (3,942) (36)
-------------------- --------------------
Net cash used in investing activities (329,579) (106,882)
Cash flows from financing activities:
Payment of bank loans and other (226,007) (144,192)
Proceeds from bank loans, other and
other long-term borrowings 533,172 75,162
Issuance of capital stock 1,018 412
Acquisition of capital stock - (11,772)
Payment of dividends to minority interest (765) (759)
Payment of dividends to shareholders (23,361) (23,178)
Other (96) -
-------------------- --------------------
Net cash provided by (used in) financing activities 283,961 (104,327)
Effect of exchange rate changes on cash (8,692) (1,962)
-------------------- --------------------
Net increase (decrease) in cash and equivalents 116,453 (5,233)
Cash and equivalents at beginning of period 131,152 152,648
-------------------- --------------------
Cash and equivalents at end of period $ 247,605 $ 147,415
==================== ====================
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid during the period for:
Interest $ 89,369 $ 96,868
==================== ====================
Income taxes $ 25,572 $ 59,850
==================== ====================
NON-CASH ACTIVITIES:
Write-off of fixed assets against
facilities reorganization charges $ - $ 39,533
==================== ====================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
3
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(Stated in thousands of U.S. dollars)
(Unaudited)
(1) Basis of presentation
The unaudited condensed consolidated financial statements as of September
30, 1999 and 2000 included herein have been prepared by Panamerican Beverages,
Inc. (the "Company"), in accordance with the rules and regulations of the
Securities and Exchange Commission (the "SEC"). In the opinion of management,
these unaudited condensed consolidated financial statements contain all
adjustments, which are of a normal recurring nature, necessary to present fairly
the Company's consolidated financial position as of September 30, 2000, and the
consolidated results of operations for the three and nine months ended September
30, 1999 and 2000. Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to the rules and regulations of the SEC.
These unaudited financial statements should be read in conjunction with the
audited financial statements and the notes thereto included in the Company's
1999 Annual Report on Form 20-F filed with the SEC on May 15, 2000. The Company
has made no significant changes in accounting policies from those reflected in
the consolidated financial statements included in the Annual Report on Form
20-F.
The financial statements of the Colombian and Venezuelan subsidiaries for
all periods have been remeasured into U.S. dollars, the reporting and functional
currency, in accordance with Statement of Financial Accounting Standards (SFAS)
No. 52, "Foreign Currency Translation", as it applies to highly inflationary
economies. The functional currencies of the Mexican, Brazilian, Costa Rican,
Nicaraguan and Guatemalan subsidiaries are the Mexican peso, Brazilian real,
Costa Rican colon, Nicaraguan cordova and Guatemalan quetzal, respectively. The
financial statements of the Mexican, Brazilian, Costa Rican, Nicaraguan and
Guatemalan subsidiaries have been translated using the current rate translation
method and the resulting translation adjustments are included in accumulated
other comprehensive income (loss), which is a component of shareholders' equity.
Foreign currency translation gains (losses) on monetary assets and liabilities
for the Colombian and Venezuelan subsidiaries have been included in the
consolidated statements of operations accounts to which such items relate as
shown below:
4
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------------------------------------
1999 2000 1999 2000
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Net sales $ (377) $ (227) $ (805) $ (630)
Cost of sales and
operating expenses 5,894 1,886 8,049 7,640
Interest and other
income, net 1,532 727 109 1,573
Provision for income taxes 589 1 1,791 1,508
------------------ ------------------ ------------------ ------------------
Net translation gain $ 7,638 $ 2,387 $ 9,144 $ 10,091
================== ================== ================== ==================
</TABLE>
(2) New accounting standards and pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS-133"), which revises the accounting
and related disclosures for derivative financial instruments. The Company is
evaluating whether the adoption of this standard, which will be implemented in
the first quarter of 2001, will have a material effect on its consolidated
financial position or consolidated results of operations.
In May 2000, the FASB's Emerging Issues Task Force ("EITF") issued EITF
00-14, "Accounting for Certain Sales Incentives". EITF 00-14 provides specific
guidance on the accounting for and presentation of sales incentives offered by
companies to their customers. These incentives include discounts, coupons,
rebates and free products or services. The Company implemented the provisions of
EITF 00-14 during the third quarter of 2000. The implementation did not have a
material impact on the Company's financial statements.
(3) Reorganization program
During the quarter ended September 30, 2000, the Company continued its
reorganization program, which was implemented during the first quarter of 2000.
As a result of this reorganization program, during the nine months ended
September 30, 2000 the Company recorded the following items in the statements of
operations:
Facilities reorganization charges.- During the nine months ended September 30,
2000, the Company recorded $79,878 of charges, all of which were recorded in the
first quarter, primarily as a result of the write-off of non-cash items of
property, plant and equipment and obsolete bottles and cases amounting to
$39,533, and $40,345 of cash items relating
5
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars)
(Unaudited)
primarily to severance payments, job terminations and reorganization of the
distribution system of the Venezuelan and Brazilian subsidiaries. During
the nine months ended September 30, 1999, the Company recorded $11,334 of
cash items related to severance payments and job terminations. These
amounts have been recorded as facilities reorganization charges.
Non-operating expenses.- During the nine months ended September 30, 2000,
the Company recorded $4,971 of charges related to the disposal of
non-operating assets, including land of some of the operating plants, which
are presented as part of other expense, net.
As a result of the facilities reorganization charges and the reorganization
expenses, the Company recorded a tax benefit of $24,590.
The following table shows a summary of the net charges and benefits
recorded in the consolidated statements of operations for the nine months
ended September 30, 2000:
<TABLE>
<CAPTION>
Cash Non-cash Total
----------------- ----------------- -----------------
<S> <C> <C> <C>
Restructuring charges $ 39,810 $ 19,590 $ 59,400
Assets write-offs 535 19,943 20,478
----------------- ----------------- -----------------
40,345 39,533 79,878
Non-operating charges - 4,971 4,971
----------------- ----------------- -----------------
$ 40,345 $ 44,504 84,849
================= =================
Income tax benefit 24,590
-----------------
$ 60,259
=================
</TABLE>
The following table shows the status of the balance of the reorganization
allowance at September 30, 2000 included as part of other current
liabilities:
<TABLE>
<CAPTION>
======Charges====== ============Applications============
Balance at Severance Fixed Fixed Balance at
December 31, and other costs assets asset September 30,
1999 Cash Non-cash cash payments sold write-offs 2000
------------- ------------ ------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Write-off of fixed assets $ - $ 1,411 $ 39,533 $ - $ 6,112 $ 34,832 $ -
Job termination and
severance benefits - 31,902 - 21,494 - - 10,408
Other - 7,032 - 6,937 - - 95
------------- ------------ ------------- ------------- ------------ ------------- ------------
Total $ - $ 40,345 $ 39,533 $ 28,431 $ 6,112 $ 34,832 $ 10,503
============= ============ ============= ============= ============ ============= ============
</TABLE>
6
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
(4) Inventories
December 31, September 30,
1999 2000
------------------- -------------------
<S> <C> <C>
Bottled beverages $ 32,683 $ 34,261
Raw materials 49,341 40,663
Spare parts, supplies and coolers 45,018 46,205
------------------- -------------------
127,042 121,129
Less - Allowance for obsolete
and slow moving items 4,064 3,812
------------------- -------------------
$ 122,978 $ 117,317
=================== ===================
(5) Property, plant, equipment, and bottles and cases
December 31, September 30,
1999 2000
------------------- -------------------
Property, plant and equipment $ 2,034,622 $ 2,031,277
Less - Accumulated depreciation 816,239 871,358
------------------- -------------------
1,218,383 1,159,919
Bottles and cases, net 310,856 273,138
------------------- -------------------
$ 1,529,239 $ 1,433,057
=================== ===================
</TABLE>
(6) Transactions with related parties
For the three and nine months ended September 30, 2000, the Company
conducted transactions with related parties. A summary of balances as of
December, 31 1999 and September 30, 2000 and transactions for the three and nine
months ended September 30, 1999 and 2000 with related parties is as follows:
7
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1999 2000
------------------- -------------------
<S> <C> <C>
Accounts receivable:
Subsidiaries of Coca-Cola $ 9,991 $ 4,748
Subsidiaries of Kaiser 3,488 -
------------------- -------------------
$ 13,479 $ 4,748
=================== ===================
Accounts payable:
Subsidiaries of Coca-Cola $ 48,946 $ 29,819
Subsidiaries of Kaiser - 1,123
Productos de Vidrio, S.A. 6,630 -
Central Azucarero Portuguesa, C.A. 1,628 -
Tapon Corona de Colombia, S.A. 1,936 880
Comptec, S.A. 976 154
Other - 486
------------------- -------------------
$ 60,116 $ 32,462
=================== ===================
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------------------------------------------------
1999 2000 1999 2000
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Income:
Marketing expense support $ 9,150 $ 8,886 $ 32,193 $ 29,565
Other 146 95 1,442 964
----------------- ----------------- ----------------- -----------------
$ 9,296 $ 8,981 $ 33,635 $ 30,529
================= ================= ================= =================
Expenses:
Purchase of concentrate $ 84,656 $ 88,040 $ 228,546 $ 232,161
Purchase of beer 16,432 13,679 55,922 42,252
Purchase of other inventories 6,217 5,694 21,000 19,223
----------------- ----------------- ----------------- -----------------
$ 107,305 $ 107,413 $ 305,468 $ 293,636
================= ================= ================= =================
Capital expenditure incentives
received in cash $ (363) $ - $ 3,193 $ -
================= ================= ================= =================
</TABLE>
8
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars)
(Unaudited)
(7) Other transactions
On March 18, 1999, the Company entered into an agreement with ING Baring US
Capital, LLC as arranger and administrative agent, for a three-year loan in the
amount of $300,000 with quarterly interest payments at LIBOR plus 2.375% through
4.75%. The proceeds were used to repay short-term bank loans of the Company. The
loan agreement establishes certain restrictions including minimum consolidated
equity and other covenants and ratios. During November 1999, $80,000 of this
loan was repaid prior to the scheduled repayment date. On March 27, 2000, the
loan agreement was amended to modify certain restrictions and other covenants
and ratios. The amendment reduced the required minimum consolidated equity from
$1,750,000 to $1,500,000. As of September 30, 2000, the Company was in
compliance with its debt covenants.
(8) Repurchase program
On December 9, 1999, the Board of Directors authorized a share repurchase
program of the Company's Class A common stock in an amount not to exceed $100
million in the aggregate. We may repurchase shares in the open market or in
privately negotiated transactions, depending on market conditions and other
factors. The Company repurchased 645,916 shares amounting to $11.8 million at an
average price per share of $18.22 during the nine months ended September 30,
2000. Since the beginning of the program in December 1999, the Company has
repurchased 1,014,500 shares for a total amount of $19.3 million at an average
price per share of $19.05.
(9) Earnings (loss) per share
Earnings (loss) per share is computed based on the weighted average number
of common shares outstanding plus the effect of outstanding warrants and stock
options using the treasury stock method in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS-128"). The
minority interest in income of subsidiaries has been excluded from income (loss)
available to common stockholders.
Following is a reconciliation of the weighted average number of shares
outstanding with the number of shares used in the computation of diluted
earnings (loss) per share:
9
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- --------------------------------------
1999 2000 1999 2000
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) $ (10,978) $ 464 $ (51,521) $ (59,514)
================= ================= ================= =================
Denominator:
Denominator for basic
earnings (loss) per share 129,705 128,733 129,691 128,869
Effect of dilutive securities:
Options to purchase
common stock - 414 - -
----------------- ----------------- ----------------- -----------------
Denominator for diluted
earnings (loss) per share 129,705 129,147 129,691 128,869
================= ================= ================= =================
Earnings (loss) per share:
Basic $ (0.08) $ 0.00 $ (0.40) $ (0.46)
================= ================= ================= =================
Diluted $ (0.08) $ 0.00 $ (0.40) $ (0.46)
================= ================= ================= =================
Antidilutive securities not included
in the diluted earnings (loss)
per share:
Options to purchase
common stock 4,026 2,189 4,026 5,260
Exercise prices $ 13.75 $ 19.62 $ 13.75 $ 13.75
to to to to
$ 29.93 $ 29.93 $ 29.93 $ 29.93
</TABLE>
(10) Comprehensive income (loss)
Beginning in 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income". This standard requires the display of comprehensive
income (loss) and its components in the financial statements. In the Company's
case, comprehensive income (loss) includes net income (loss) and foreign
currency translation. The comprehensive income (loss) for the three and nine
months ended September 30, 1999 and 2000 is as follows:
10
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- -----------------------------------
1999 2000 1999 2000
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net income (loss) $ (10,978) $ 464 $ (51,521) $ (59,514)
Other comprehensive income (loss):
Initial effect on deferred taxes
relating to the change in the
functional currency in the
Mexican subsidiary - - (14,928) -
Foreign currency translation (33,939) 3,988 (106,308) (18,903)
---------------- ---------------- ---------------- ---------------
$ (44,917) $ 4,452 $(172,757) $ (78,417)
================ ================ ================ ===============
</TABLE>
(11) Segments and related information
Relevant information concerning the geographic areas in which the Company
operates, is as follows:
<TABLE>
<CAPTION>
Nine months ended September 30, 1999
----------------------------------------------------------------------------------------------------
Central
Mexico Brazil Colombia Venezuela America Corporate Total
------------- ------------- ------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 586,886 $ 368,293 $ 295,965 $ 372,213 $ 157,115 $ - $ 1,780,472
============= ============= ============ ============= ============ ============= =============
Operating income (loss) $ 97,604 $ 1,025 $ 11,298 $ (3,265) $ 19,815 $ (29,685) $ 96,792
============= ============= ============ ============= ============ ============= =============
Interest expense, net $ (7,592) $ (10,921) $ (2,943) $ (12,774) $ (1,464) $ (34,211) $ (69,905)
============= ============= ============ ============= ============ ============= =============
Depreciation and
amortization $ 29,612 $ 25,531 $ 44,082 $ 54,049 $ 13,528 $ 22,047 $ 188,849
============= ============= ============ ============= ============ ============= =============
Capital expenditures $ 44,399 $ 20,980 $ 18,726 $ 48,092 $ 16,901 $ - $ 149,098
============= ============= ============ ============= ============ ============= =============
December 31, 1999
----------------------------------------------------------------------------------------------------
Long-lived assets $ 448,196 $ 309,441 $ 445,428 $ 466,846 $ 133,080 $ 1,293,878 $ 3,096,869
============= ============= ============ ============= ============ ============= =============
Total assets $ 549,420 $ 486,198 $ 498,005 $ 556,696 $ 171,174 $ 1,351,629 $ 3,613,122
============= ============= ============ ============= ============ ============= =============
</TABLE>
11
<PAGE>
PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30, 2000
----------------------------------------------------------------------------------------------------
Central
Mexico Brazil Colombia Venezuela America Corporate Total
------------- ------------- ------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 725,979 $ 356,273 $ 278,850 $ 371,384 $ 165,111 $ (175) $ 1,897,422
============= ============= ============ ============= ============ ============= =============
Operating income (loss) $ 110,845 $ 5,559 $ (2,559) $ (27,635) $ 20,114 $ (32,526) $ 73,798
============= ============= ============ ============= ============ ============= =============
Interest expense, net $ (9,918) $ (10,014) $ (2,989) $ (17,935) $ (709) $ (41,671) $ (83,236)
============= ============= ============ ============= ============ ============= =============
Depreciation and
amortization $ 41,156 $ 22,435 $ 45,114 $ 56,432 $ 12,499 $ 21,844 $ 199,480
============= ============= ============ ============= ============ ============= =============
Capital expenditures $ 49,494 $ 5,141 $ 6,201 $ 23,197 $ 12,464 $ - $ 96,497
============= ============= ============ ============= ============ ============= =============
September 30, 2000
----------------------------------------------------------------------------------------------------
Long-lived assets $ 459,931 $ 267,465 $ 408,746 $ 420,408 $ 131,991 $ 1,244,654 $ 2,933,195
============= ============= ============ ============= ============ ============= =============
Total assets $ 609,258 $ 446,840 $ 462,401 $ 483,943 $ 174,161 $ 1,281,834 $ 3,458,437
============= ============= ============ ============= ============ ============= =============
</TABLE>
(12) Reclassifications of prior financial statements
Certain prior year information has been reclassified to conform to the
current year presentation.
The statements of operations data for Panamco Mexico, Panamco Brasil, Panamco
Colombia, Panamco Venezuela, and Panamco Central America (Costa Rica, Nicaragua
and Guatemala) are presented on the following pages. The data presented as of
and for each period have been derived from the unaudited financial statements of
Panamco Mexico, Panamco Brasil, Panamco Colombia, Panamco Venezuela, and Panamco
Central America, as applicable, which financial statements are not included
herein.
12
<PAGE>
PANAMCO MEXICO
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- -----------------------------------
1999 2000 1999 2000
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Selected statements of operations:
Net sales $ 212,631 $ 255,778 $ 586,886 $ 725,979
Cost of sales, excluding depreciation
and amortization 99,079 110,820 278,881 322,399
---------------- ---------------- ---------------- ---------------
Gross profit 113,552 144,958 308,005 403,580
Operating expenses:
Selling, general and administrative 62,096 80,058 180,789 232,620
Depreciation and amortization,
excluding goodwill 9,785 12,946 27,421 38,927
Amortization of goodwill 748 749 2,191 2,229
Facilities reorganization charges - - - 18,959
---------------- ---------------- ---------------- ---------------
72,629 93,753 210,401 292,735
---------------- ---------------- ---------------- ---------------
Operating income 40,923 51,205 97,604 110,845
Interest expense, net (2,566) (2,560) (7,592) (9,918)
Other income (expense), net (27) (1,173) 5,203 218
---------------- ---------------- ---------------- ---------------
Income before income taxes 38,330 47,472 95,215 101,145
Income taxes 12,513 15,985 31,079 33,610
---------------- ---------------- ---------------- ---------------
Income before minority interest 25,817 31,487 64,136 67,535
Minority interest in Panamco
Mexico subsidiaries 975 1,189 2,422 2,550
---------------- ---------------- ---------------- ---------------
Net income attributable to
Panamco Mexico 24,842 30,298 61,714 64,985
Minority interest in Panamco
Mexico 461 416 1,146 1,060
---------------- ---------------- ---------------- ---------------
Net income attributable
to Panamco $ 24,381 $ 29,882 $ 60,568 $ 63,925
================ ================ ================ ===============
Cash operating profit $ 51,456 $ 64,900 $ 127,216 $ 162,364
================ ================ ================ ===============
Unit case sales data (in millions):
Soft drinks 70.0 72.5 203.1 214.7
Water 35.3 43.8 104.6 125.3
Other products 0.7 0.7 1.8 2.0
</TABLE>
13
<PAGE>
PANAMCO BRASIL
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- -----------------------------------
1999 2000 1999 2000
---------------- ---------------- ---------------- ---------------
Selected statements of operations:
<S> <C> <C> <C> <C>
Net sales $ 116,976 $ 111,813 $ 368,293 $ 356,273
Cost of sales, excluding depreciation
and amortization 70,173 67,181 225,668 217,292
---------------- ---------------- ---------------- ---------------
Gross profit 46,803 44,632 142,625 138,981
Operating expenses:
Selling, general and administrative 37,814 32,736 113,845 99,869
Depreciation and amortization,
excluding goodwill 7,190 7,144 24,039 20,874
Amortization of goodwill 467 541 1,492 1,561
Facilities reorganization charges - - 2,224 11,118
---------------- ---------------- ---------------- ---------------
45,471 40,421 141,600 133,422
---------------- ---------------- ---------------- ---------------
Operating income 1,332 4,211 1,025 5,559
Interest expense, net (3,998) (2,794) (10,921) (10,014)
Other expense, net (10,194) (6,759) (41,255) (12,177)
---------------- ---------------- ---------------- ---------------
Loss before
income taxes (12,860) (5,342) (51,151) (16,632)
Income tax benefit (3,684) (2,047) (14,247) (7,906)
---------------- ---------------- ---------------- ---------------
Loss before
minority interest (9,176) (3,295) (36,904) (8,726)
Minority interest in Panamco
Brasil (133) (42) (527) (105)
---------------- ---------------- ---------------- ---------------
Net loss attributable
to Panamco $ (9,043) $ (3,253) $ (36,377) $ (8,621)
================ ================ ================ ===============
Cash operating profit $ 8,989 $ 11,896 $ 26,556 $ 32,024
================ ================ ================ ===============
Unit case sales data (in millions):
Soft drinks 61.5 53.9 168.3 169.0
Water 2.8 3.1 9.2 9.9
Beer 15.7 13.8 43.1 43.9
</TABLE>
14
<PAGE>
PANAMCO COLOMBIA
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- -----------------------------------
1999 2000 1999 2000
---------------- ---------------- ---------------- ---------------
Selected statements of operations:
<S> <C> <C> <C> <C>
Net sales $ 90,456 $ 93,410 $ 295,965 $ 278,850
Cost of sales, excluding depreciation
and amortization 40,996 40,367 131,602 118,637
---------------- ---------------- ---------------- ---------------
Gross profit 49,460 53,043 164,363 160,213
Operating expenses:
Selling, general and administrative 31,287 31,111 108,983 99,433
Depreciation and amortization,
excluding goodwill 14,949 15,079 44,082 44,907
Amortization of goodwill - 207 - 207
Facilities reorganization charges - - - 18,225
---------------- ---------------- ---------------- ---------------
46,236 46,397 153,065 162,772
---------------- ---------------- ---------------- ---------------
Operating income (loss) 3,224 6,646 11,298 (2,559)
Interest expense, net (77) (1,096) (2,943) (2,989)
Other income (expense), net 217 193 1,785 (5,405)
---------------- ---------------- ---------------- ---------------
Income (loss) before
income taxes 3,364 5,743 10,140 (10,953)
Income taxes (benefit) 840 1,555 2,138 (3,653)
---------------- ---------------- ---------------- ---------------
Income (loss) before
minority interest 2,524 4,188 8,002 (7,300)
Minority interest in Panamco
Colombia subsidiaries 28 55 69 113
---------------- ---------------- ---------------- ---------------
Net income (loss) attributable
to Panamco Colombia 2,496 4,133 7,933 (7,413)
Minority interest in Panamco
Colombia 68 113 218 (205)
---------------- ---------------- ---------------- ---------------
Net income (loss) attributable
to Panamco $ 2,428 $ 4,020 $ 7,715 $ (7,208)
================ ================ ================ ===============
Cash operating profit $ 18,173 $ 21,932 $ 55,380 $ 49,473
================ ================ ================ ===============
Unit case sales data (in millions):
Soft drinks 38.0 38.2 113.3 114.1
Water 9.5 8.8 29.3 25.7
</TABLE>
15
<PAGE>
PANAMCO VENEZUELA
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- -----------------------------------
1999 2000 1999 2000
---------------- ---------------- ---------------- ---------------
Selected statements of operations:
<S> <C> <C> <C> <C>
Net sales $ 134,290 $ 131,568 $ 372,213 $ 371,384
Cost of sales, excluding depreciation
and amortization 61,727 61,369 167,753 170,925
---------------- ---------------- ---------------- ---------------
Gross profit 72,563 70,199 204,460 200,459
Operating expenses:
Selling, general and administrative 51,533 51,919 144,566 140,808
Depreciation and amortization 18,028 18,365 54,049 56,432
Facilities reorganization charges 720 - 9,110 30,854
---------------- ---------------- ---------------- ---------------
70,281 70,284 207,725 228,094
---------------- ---------------- ---------------- ---------------
Operating income (loss) 2,282 (85) (3,265) (27,635)
Interest expense, net (4,747) (6,966) (12,774) (17,935)
Other income, net 329 3,941 2,206 3,190
---------------- ---------------- ---------------- ---------------
Loss before
income taxes (2,136) (3,110) (13,833) (42,380)
Income taxes (benefit) 4,209 294 7,578 (3,620)
---------------- ---------------- ---------------- ---------------
Net loss attributable
to Panamco (6,345) (3,404) (21,411) (38,760)
================ ================ ================ ===============
Cash operating profit $ 20,310 $ 18,280 $ 50,784 $ 46,374
================ ================ ================ ===============
Unit case sales data (in millions):
Soft drinks 36.4 39.1 110.5 112.3
Water 4.7 6.0 13.3 16.3
Beer 0.2 0.6 0.3 1.2
Other products 1.9 1.5 4.8 4.6
</TABLE>
16
<PAGE>
PANAMCO CENTRAL AMERICA
(Stated in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------- -----------------------------------
1999 2000 1999 2000
---------------- ---------------- ---------------- ---------------
Selected statements of operations:
<S> <C> <C> <C> <C>
Net sales $ 50,765 $ 55,684 $ 157,115 $ 165,111
Cost of sales, excluding depreciation
and amortization 24,264 25,365 73,566 75,781
---------------- ---------------- ---------------- ---------------
Gross profit 26,501 30,319 83,549 89,330
Operating expenses:
Selling, general and administrative 16,071 19,371 50,206 55,995
Depreciation and amortization,
excluding goodwill 4,406 3,880 13,332 12,318
Amortization of goodwill 63 59 196 181
Facilities reorganization charges - - - 722
---------------- ---------------- ---------------- ---------------
20,540 23,310 63,734 69,216
---------------- ---------------- ---------------- ---------------
Operating income 5,961 7,009 19,815 20,114
Interest expense, net (455) (157) (1,464) (709)
Other expense, net (2,186) (595) (4,644) (1,403)
---------------- ---------------- ---------------- ---------------
Income before
income taxes 3,320 6,257 13,707 18,002
Income taxes 1,049 1,178 4,145 3,927
---------------- ---------------- ---------------- ---------------
Net income attributable
to Panamco $ 2,271 $ 5,079 $ 9,562 $ 14,075
================ ================ ================ ===============
Cash operating profit $ 10,430 $ 10,948 $ 33,343 $ 33,257
================ ================ ================ ===============
Unit case sales data (in millions):
Soft drinks 16.8 17.2 51.2 51.8
Water 0.9 0.7 2.7 2.0
Other products 0.1 0.1 0.4 0.4
</TABLE>
17
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
The following discussion addresses the financial condition and results of
operations of Panamerican Beverages, Inc. ("Panamco") and its consolidated
subsidiaries. This discussion should be read in conjunction with our unaudited
condensed consolidated financial statements as of September 30, 1999 and 2000
and for the three month and nine month periods then ended and the notes
thereto included elsewhere herein. Results for any interim period are not
necessarily indicative of results for any full year.
We conduct our operations through tiers of subsidiaries in which, in some
cases, minority shareholders hold interests. Since we have varying percentage
ownership interests in our approximately 60 consolidated subsidiaries, the
amount of the minority interest in income or loss before minority interest
during a period depends upon the revenues and expenses of each of the
consolidated subsidiaries and the percentage of each of such subsidiary's
capital stock owned by minority shareholders during such period.
In 1998, we created the "Panamco Central America" group, which consists of
Panamco Costa Rica, Panamco Nicaragua and Panamco Guatemala. The financial
condition and results of operations of these three companies have been
reported together in the financial statements of Panamco Central America.
In February 1999, we formed the North Latin American Division, which consists
of Panamco Mexico and Panamco Central America. We will continue to report
these results of operations separately.
Unit case means 192 ounces of finished beverage product (24 eight-ounce
servings). Average sales prices per unit case means net sales in U.S. dollars
for the period divided by the number of unit cases sold during the same
period. Cash operating profit means operating income plus depreciation,
amortization of goodwill and noncash facilities reorganization charges.
Forward-looking statements, contained in this document include the amount of
future capital expenditures and the possible uses of proceeds from any future
borrowings. The words believes, intends, expects, anticipates, projects,
estimates, predicts, and similar expressions are also intended to identify
forward-looking statements. Such statements, estimates, and projections
reflect various assumptions by our management, concerning anticipated results
and are subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control. Factors
that could cause results to differ include, but are not limited to, changes in
the soft drink business environment, including actions of competitors and
changes in consumer preference, changes in governmental laws and regulations,
including income taxes, market demand for new and existing products, raw
material prices and devaluation of local currencies against the U.S. dollar.
Accordingly, we cannot assure you that such statements, estimates and
projections will be realized. The forecasts and actual results will likely
vary and those variations may be material. We make no representation or
warranty as to the accuracy or completeness of such statements, estimates or
projections contained in this document or that any forecast contained herein
will be achieved.
18
<PAGE>
Regarding the Year 2000 issue, as of this date, there have been no adverse
effects on the Company's systems or operations, including the ability of any
significant customer, vendor or service provider that do business with the
Company, and we have complied with all regulatory and contractual
requirements. We do not expect any contingencies regarding this issue.
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999
Consolidated Results of Operations
Consolidated net sales for the third quarter ended September 30, 2000,
increased 7.1% to $648.2 million from $605.1 million in the 1999 third
quarter, mainly due to an increase of 1.8% in consolidated unit case sales
volume. Total consolidated unit case sales increased to 299.9 million cases
from 294.6 unit cases in the 1999 period. Consolidated soft drink sales volume
for the period was down 0.8%, reflecting increases of 7.6% in Venezuela, 3.5%
in Mexico, 2.4% in the Central American Region and 0.4% in Colombia, offset by
a decline of 12.2% in Brazil. Consolidated unit case sales volume of bottled
water increased 16.8% to 62.4 million unit cases, and unit case sales volume
of beer, sold in Brazil and Venezuela, decreased 9.9% to 14.3 million unit
cases.
The cost of sales as a percentage of net sales decreased to 47.0% during the
2000 third quarter from 49.0% in the 1999 third quarter, primarily driven by
cost savings in raw materials and packaging in several countries due to
improved procurement contracts.
Operating expenses as a percentage of net sales increased slightly to 44.4%
during the 2000 third quarter from 44.0% in 1999, mainly as a result of a
one-time charge of $4.0 million related to senior management changes announced
in October, offset by the initial benefits of the reorganization program.
Operating income increased to $55.2 million during the third quarter of 2000
from $42.8 million in 1999. Cash operating profit increased 14.7% to $121.4
million from $105.9 million in the 1999 third quarter.
Net interest expense increased to $28.1 million during the third quarter of
2000 from $23.1 million in the 1999 period, due primarily to an increase in
the average variable (LIBOR) interest rate.
Other expense, net decreased to $5.7 million during the 2000 third quarter
from $13.0 million in the 1999 period, primarily as a result of a $5.5 million
decrease in foreign exchange losses in Brazil.
The consolidated effective income tax rate for the three months ended
September 30, 2000 was 92.2% compared to 246.6% during the three months ended
September 30, 1999. The increased rate during the three months ended September
30, 1999 was the result of our decision to establish a valuation allowance on
benefits of tax loss carry-forwards from prior years in Venezuela. This
valuation allowance was established because of the uncertainty that we would
have sufficient taxable income in the near term to offset against such
benefits.
19
<PAGE>
As a result of the foregoing, Panamco had net income for the 2000 third
quarter of $0.5 million, or $0.00 per share (basic and diluted), compared to a
net loss of $11.0 million, or $0.08 per share (basic and diluted), in the
third quarter of 1999.
Regional Results
Mexico
Panamco Mexico reported an increase of 20.3% in net sales to $255.8 million
during the third quarter of 2000, compared to $212.6 million in the 1999 third
quarter. Soft drink sales increased 18.9% on volume growth of 3.5% to 72.5
million unit cases and a 15.0% price increase in dollar terms. Water volume
grew 24.1% to 43.8 million unit cases, mainly due to the continued increase in
water jug sales volume due to increased coverage of the Company's franchise
territories. During the quarter, Panamco Mexico maintained its strong soft
drink share of sales of 82.4%.
Cost of sales as a percentage of net sales dropped to 43.3% in the 2000 third
quarter versus 46.6% during third quarter of 1999, mainly due to continued
cost savings in raw materials.
Operating expenses as a percentage of net sales increased to 36.7% in the
third quarter of 2000 from 34.2% in the comparable period for 1999, mainly due
to increased selling, general and administrative expenses as a result of
higher sales commissions and increased administrative wages and benefits, as
well as higher depreciation expenses.
Operating income increased to $51.2 million from $40.9 million in the 1999
third quarter as a result of the initial benefits of the reorganization
program. Cash operating profit increased 26.1% to $64.9 million from $51.5
million in the 1999 third quarter.
Net interest expense in the 2000 third quarter remained flat at $2.6 million
compared to the 1999 period.
Other expense, net increased to $1.2 million in the 2000 third quarter from
$0.03 million in the 1999 quarter, mainly due to a $1.4 million increase in
foreign exchange losses.
The effective income tax rate for the third quarter increased slightly to
33.7% from 32.6%.
As a result of the foregoing, net income contributed by Panamco Mexico to the
Company increased 22.6% to $29.9 million for the third quarter of 2000
compared to $24.4 million in the third quarter of 1999. Net income
attributable to Panamco for the 2000 quarter was positively impacted by the
initial benefits of the reorganization program.
Brazil
Panamco Brasil, which operates in the Sao Paulo, Campinas, Santos and Mato
Grosso do Sul regions of Brazil, reported 2000 third quarter net sales of
$111.8 million, a decrease of 4.4% from the 1999 quarter, primarily as a
result of a volume decline of 11.6%, partially offset by strategic pricing
initiatives implemented during the quarter. Sales volume of soft drinks
decreased by 12.2% to 53.9 million unit cases, following the Company's exit in
July of its
20
<PAGE>
promotional pricing strategy, in place since March 1999. Beer volume decreased
by 12.5% to 13.8 million unit cases and bottled water volume increased 8.0% to
3.1 million unit cases. Panamco Brasil maintained a strong 54.2% total soft
drink share of sales in the 2000 third quarter.
Cost of sales as a percentage of net sales increased slightly to 60.1% in the
2000 third quarter from 60.0% in the 1999 third quarter. The slight increase
is primarily attributable to lower production efficiencies, offset by the
reductions in the cost of raw materials and production labor and increased
direct sales to supermarkets by Cervejarias Kaiser in Panamco Brasil
territories.
Operating expenses as a percentage of net sales decreased to 36.2% from 38.9%
in the 1999 third quarter, mainly due to cost and expense reductions resulting
from the Company's reorganization program.
Operating income increased 216.1% to $4.2 million during the third quarter of
2000 from $1.3 million in the 1999 quarter, primarily as a result of the
initial benefits of the reorganization program. Cash operating profit
increased 32.3% to $11.9 million from $9.0 million in the 1999 third quarter.
Net interest expense decreased by 30.1% to $2.8 million in the third quarter
of 2000 from $4.0 million in the 1999 quarter, mainly due to less interest
paid resulting from reduced indebtedness.
Other expense, net decreased to $6.8 million in the 2000 third quarter from
$10.2 million in the 1999 quarter, mainly as a result of a $5.5 million
decrease in foreign exchange losses, offset by a $1.6 million increase in
equity loss of Cervejarias Kaiser.
The effective income tax benefit increased to 38.3% in the third quarter of
2000 from 28.6% in the 1999 quarter, as a result of favorable tax planning
strategies.
As a result of the above, the net loss contributed to Panamco by Panamco
Brasil decreased 64.0% to $3.3 million in the third quarter 2000 from $9.0
million in the 1999 period.
Colombia
Panamco Colombia, which operates throughout Colombia, reported net sales of
$93.4 million for the 2000 third quarter, up 3.3% from the 1999 period. The
revenue increase resulted from price increases in local currency, partially
offset by a 14.0% devaluation of the Colombian peso over the last twelve
months and a 1.3% decrease in total volumes to 47.0 million unit cases, mainly
the result of a weak economic environment. Soft drink volume was up 0.4% to
38.2 million unit cases, as a result of strong marketing and merchandising
activities. Water volume was down 7.9% to 8.8 million unit cases, as a result
of price increases mainly in certain specific individual size presentations.
Panamco Colombia continued strengthening its position in the market, achieving
a record high soft drink share of sales of 68.3% in September 2000, up 2.9
points from the same period in 1999.
Cost of sales as a percentage of net sales decreased to 43.2% during the third
quarter of 2000 from 45.3% in the same period of 1999, as a result of cost
savings in raw materials.
21
<PAGE>
Operating expenses as a percentage of net sales decreased to 49.7% in the
third quarter of 2000 from 51.1% in the 1999 quarter, mainly due to cost and
expense reductions resulting from the Company's reorganization program.
Operating income increased 106.1% to $6.6 million during the third quarter of
2000 from operating income of $3.2 million in the 1999 quarter, primarily as a
result of the initial benefits of the reorganization program. Cash operating
profit increased 20.7% to $21.9 million from $18.2 million in the 1999 third
quarter.
Net interest expense increased during the third quarter of 2000 to $1.1
million from $0.08 million in the 1999 quarter, due to a larger currency
translation effect during the 1999 third quarter. Without the translation
effect, net interest expense decreased by 34.6%, due to less interest paid
resulting from reduced indebtedness.
Other income, net in the 2000 third quarter remained flat at $0.2 million
compared to the 1999 period.
The effective income tax rate increased to 27.1% in the third quarter of 2000
from 25.0% in the 1999 quarter, primarily due to the recognition of tax
credits recorded during the third quarter of 1999, which were not available in
the 2000 quarter.
As a result of the above, net income attributable to the Company from Panamco
Colombia increased 65.6% to $4.0 million in the 2000 third quarter from net
income of $2.4 million in the 1999 period.
Venezuela
Panamco Venezuela reported net sales of $131.6 million for the third quarter
of 2000, down 2.0% from 1999, mainly as a result of devaluation of the
Venezuelan bolivar, which was not fully offset by price increases in local
currency for the period. Total sales volume for the third quarter increased
9.3% to 47.2 million unit cases of which soft drink and water volumes
increased 7.6% and 26.4%, respectively. Panamco Venezuela maintained its
strong soft drink share of sales of 66.1% for the quarter.
Cost of sales as a percentage of net sales increased slightly to 46.6% during
the third quarter of 2000 from 46.0% during the same period in 1999, as a
result of higher costs associated with the increase in sales of nonreturnable
presentations.
Operating expenses as a percentage of net sales increased slightly to 53.4% in
the third quarter of 2000 from 52.3% in the 1999 quarter, mainly due to the
impact of a mandatory salary increase, not fully offset by cost reduction
efforts related to our reorganization program announced in May.
Operating loss decreased 103.7% to $0.09 million during the third quarter of
2000 from operating income of $2.3 million in the 1999 quarter, primarily due
to lower net sales as a result of devaluation of the Venezuelan bolivar. Cash
operating profit decreased 10.0% to $18.3 million from $20.3 million in the
1999 third quarter.
22
<PAGE>
Net interest expense increased to $7.0 million during the third quarter of 2000
from $4.7 million in 1999, due to $2.0 million in costs incurred in a $120.0
million hedging contract entered into on July 18, 2000 and an increase in the
average variable (LIBOR) interest rate.
Other income, net increased to $3.9 million from $0.3 million in the 1999 third
quarter, primarily due to recognition of a tax credit because of a favorable
outcome of a claim and income received from sales of returned packaging
materials.
The effective income tax rate decreased to 9.5% in the third quarter of 2000
from 197.1% in 1999. The increased rate during the three months ended September
30, 1999 was the result of our decision to establish a valuation allowance on
benefits of tax loss carry-forwards from prior years. This valuation allowance
was established because of the uncertainty that we would generate sufficient
taxable income in the near term to offset against such benefits.
As a result of the above, net loss attributable to the Company from Panamco
Venezuela decreased 46.4% to $3.4 million in the 2000 third quarter from $6.3
million in the 1999 period.
Central America
Panamco's Central American region includes franchises in Costa Rica, Nicaragua
and Guatemala. The region reported net sales of $55.7 million for the third
quarter of 2000, an increase of 9.7% from $50.8 million in the third quarter of
1999. The increase was attributable to volume growth of 0.9% to 18.0 million
unit cases, and to price increases in dollar terms of approximately 8.8%. Soft
drink volume increased 2.4% to 17.2 million unit cases and water volume was down
27.6% to 0.7 million unit cases, due to a change in the Company's selling
strategy for five gallon jug presentations. Panamco's share of sales increased
to 94.1% in Costa Rica, 44.6% in Guatemala and 84.9% in Nicaragua.
Cost of sales as a percentage of net sales decreased to 45.6% during the third
quarter of 2000 from 47.8% in the same period of 1999, as a result cost savings
in raw materials.
Operating expenses as a percentage of net sales increased to 41.9% in the third
quarter of 2000 from 40.5% during the same period in 1999, mainly due to higher
sales and distribution expenses.
Operating income increased 17.6% to $7.0 million in the third quarter of 2000
from $6.0 million in the 1999 period, primarily as a result of higher sales.
Cash operating profit increased 5.0% to $10.9 million in the third quarter of
2000 from $10.4 million in the 1999 period.
Net interest expense decreased to $0.2 million from $0.5 million in the third
quarter of 1999, due to a decrease in net debt and improved financing
conditions.
Other expense, net decreased to $0.6 million from $2.2 million in the 1999
third quarter, as a result of lower foreign exchange losses in Nicaragua and
Guatemala.
As a result of the above, net income contributed by Panamco Central America
to the Company increased 123.6% to $5.1 million in the third quarter of
2000 from $2.3 million in the 1999 period.
23
<PAGE>
Nine Months Ended September 30, 2000 Compared to nine Months Ended September
30, 1999
Consolidated Results of Operations
Consolidated net sales for the nine months ended September 30, 2000, increased
6.6% to $1.90 billion from $1.78 billion during the same period in 1999,
mainly due to an increase of 4.4% in consolidated unit case sales volume.
Total consolidated unit cases sales increased to 893.3 million cases from
856.0 unit cases in the 1999 period. Consolidated soft drink sales volume for
the period was up 2.4%, reflecting increases of 5.7% in Mexico, 1.6% in
Venezuela, 1.3% in the Central American Region, 0.6% in Colombia and 0.5% in
Brazil. Consolidated unit case sales volume of bottled water increased 12.6%
to 179.3 million, and unit case sales volume of beer, sold in Brazil and
Venezuela, increased 3.8% to 45.0 million unit cases.
The cost of sales as a percentage of net sales decreased to 47.6% during the
nine months ended September 30, 2000 from 49.3% during the same period in
1999, primarily driven by cost savings in raw materials and packaging in
several countries due to improved procurement contracts.
The following discussions are after the recording of facilities reorganization
charges (explained below).
Operating expenses as a percentage of net sales increased to 48.5% during the
nine months ended September 30, 2000 from 45.3% during the same period in
1999, mainly as a result of the effect of facilities reorganization charges of
$79.9 million or 4.2% as a percentage of net sales in 2000 compared to $11.3
million in the same 1999 period.
Operating income decreased to $73.8 million during the nine months ended
September 30, 2000 from $96.8 million during the same period in 1999. Cash
operating profit increased 9.5% to $312.8 from $285.6 million during the same
period in 1999.
Net interest expense increased to $83.2 million during the first nine months
of 2000 from $69.9 million during the same period in 1999, due primarily to an
increase in the average variable (LIBOR) interest rate.
Other expense, net decreased to $18.1 million during the first nine months of
2000 from $40.1 million during the same period in 1999, primarily caused by a
$31.5 million decrease in foreign exchange losses in Brazil due to a 59.0%
devaluation of the Brazilian real during the first nine months of 1999,
partially offset by $5.0 million of non-operating charges related to the
disposal of non-operating assets during the first nine months of 2000.
The consolidated effective income tax rate decreased to 106.1% during the first
nine months of 2000 from 272.4% during the first nine months of 1999, as a
result of higher losses reported during the first nine months of 2000, the
effect of the asset tax (minimum tax) in Venezuela and our decision to establish
a valuation allowance on benefits of tax loss carry-forwards from prior years in
Venezuela because of the uncertainty that we would have sufficient taxable
income in the near term to offset against such benefits.
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As a result of the foregoing, Panamco had a net loss for the first nine months
of 2000 of $59.5 million, or $0.46 per share (basic and diluted), compared to a
net loss of $51.5 million, or $0.40 per share (basic and diluted), during the
first nine months of 1999.
Facilities reorganization charges. During the first nine months of 2000, Panamco
began a company-wide reorganization program designed to improve productivity and
strengthen the Company's competitive position in the beverage industry.
The program includes productivity initiatives to streamline Panamco's
manufacturing infrastructure, consolidation of distribution centers and
warehouses, and the termination of approximately 6,750 jobs across all levels of
the Company.
For the nine months ended September 30, 2000, Panamco recorded a net one-time
charge of $84.8 million, $79.9 million as facilities reorganization charges and
$5.0 million as non-operating charges, reflecting the following items related to
the Company's reorganization program:
1. Restructuring charges totaling $59.4 million consist of the following:
o Cash restructuring charges totaling approximately $39.8 million, which
include $31.9 million from job terminations and $7.0 million from the
restructuring of our distribution system in Brazil and Venezuela;
o Non-cash restructuring charges totaling approximately $19.6 million,
which result from seven plant closings and the related disposal of
property, plant and equipment;
2. Asset write-offs totaling $20.5 million, including $15.5 million of
property, plant and equipment in all operating units and $4.5 million of
obsolete bottles and cases, mainly in the Venezuelan unit's water jug
business, and $0.5 million of cash charges related to the disposal of
property, plant and equipment; and
3. Non-operating asset charges totaling $5.0 million, net related to the
disposal of non-operating assets, including affiliated companies and land
in some of the operating units.
As a result of the above, Panamcos income for the first nine months of 2000
was impacted by facilities reorganization charges and non-operating charges
totaling $60.3 million, net of the related tax benefit of approximately $24.6
million.
Regional Results
Mexico
Panamco Mexico reported an increase of 23.7% in net sales to $726.0 million
for the nine months ended September 30, 2000, compared to $586.9 million
during the same period of 1999. Soft drink sales increased 22.4% on volume
growth of 5.7% to 214.7 million unit cases and a 28.3% price increase in
dollar terms. Water volume grew 19.8% to 125.3 million unit cases, mainly due
to the continued increase in water jug sales volume due to increased coverage
of the Company's franchise territories. During the first nine months of 2000,
Panamco Mexico maintained its strong soft drink share of sales of 80.5%.
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Cost of sales as a percentage of net sales decreased to 44.4% for the first
nine months of 2000 versus 47.5% for the same period of 1999, mainly due to
continued cost savings in raw materials.
Operating expenses, including facilities reorganization charges, as a
percentage of net sales increased to 40.3% for the first nine months of 2000
from 35.9% in the comparable period for 1999, mainly due to increased selling,
general and administrative expenses as a result of higher sales commissions
and increased administrative wages and benefits, higher depreciation expenses
and facilities reorganization charges of $19.0 million or 2.6% as a percentage
of net sales.
Operating income increased to $110.8 million for the first nine months of 2000
compared to $97.6 million during the same period of 1999. Cash operating
profit increased 27.6% to $162.4 million from $127.2 million for the same
period of 1999.
Net interest expense increased by 30.6% to $9.9 million for the first nine
months of 2000 from $7.6 million in 1999 due to the issuance of an aggregate
of $106 million in unsecured peso-denominated promissory notes in November of
1999 in a local debt offering.
Other income, net decreased to $0.2 million for the first nine months of 2000
from $5.2 million in 1999, due to a decrease in profit from the sale of
property and equipment of $1.9 million, a decrease in contributions received
from The Coca-Cola Company for capital expenditures of $1.6 million and
non-operating charges of $1.7 million related to the disposal of non-operating
assets.
The effective income tax rate for the period increased slightly to 33.2% from
32.6% in the prior year.
As a result of the foregoing, net income contributed by Panamco Mexico to the
Company increased 5.5% to $63.9 million for the first nine months of 2000
compared to $60.6 million during the same period of 1999. Net income
attributable to Panamco for the first nine months of 2000 was impacted by
facilities reorganization charges and non-operating charges totaling $13.5
million, net of the related tax benefit.
Brazil
Panamco Brasil, which operates in the Sao Paulo, Campinas, Santos and Mato
Grosso do Sul regions of Brazil, reported a decrease of 3.3% in net sales to
$356.3 million during the nine months ended September 30, 2000, compared to
net sales of $368.3 million during the same period of 1999, primarily the
result of a lower average price per beer sold, caused by increased direct
sales made by Cervejarias Kaiser to the supermarkets, for which Panamco Brasil
records the commissions as sales. Sales volume of soft drinks increased by
0.5%, to 169.0 million unit cases. Beer volume increased by 1.7% to 43.9
million unit cases and bottled water volume increased 7.5% to 9.9 million unit
cases. During the first nine months of 2000, Panamco Brasil maintained a
strong 55.9% total soft drink share of sales.
Cost of sales as a percentage of net sales decreased slightly to 61.0% for the
first nine months of 2000 versus 61.3% for the same period of 1999. The
decrease is primarily
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attributable to the reductions in the cost of raw materials and production
labor and increased direct sales to supermarkets by Cervejarias Kaiser in
Panamco Brasil territories.
Operating expenses, including facilities reorganization charges, as a
percentage of net sales decreased to 37.4% for the first nine months of 2000
from 38.4% in the comparable period for 1999, mainly due to cost and expense
reductions resulting from the Company's reorganization program.
Operating income increased 442.3% to $5.6 million during the first nine months
of 2000 from $1.0 million during the same period of 1999, primarily as a
result of the initial benefits of the reorganization program. Cash operating
profit increased 20.6% to $32.0 million from $26.6 million for the same period
of 1999.
Net interest expense decreased by 8.3% to $10.0 million during the first nine
months of 2000 versus $10.9 million for the same period of 1999, caused by
less interest paid resulting from debt reduction.
Other expense, net decreased to $12.2 million during the first nine months of
2000 from $41.3 million for the same period of 1999, mainly as a result of a
decrease in foreign exchange loss, which was $1.7 million for the first nine
months of 2000 due to a 3.0% devaluation of the Brazilian real versus a $33.2
million foreign exchange loss in the first nine months of 1999 due to a 63.4%
devaluation. Panamco Brasil also had non-operating charges of $1.0 million
related to the disposal of non-operating assets during the first nine months
of 2000.
The effective income tax benefit increased to 47.5% during the first nine
months of 2000 from 27.9% for the same period of 1999, mainly due to favorable
tax planning strategies.
As a result of the above, the net loss contributed to Panamco by Panamco
Brasil decreased 76.3% to $8.6 million during the first nine months of 2000
from $36.4 million in the 1999 period. This net loss was impacted by
facilities reorganization charges and non-operating charges totaling $8.1
million, net of the related tax benefit.
Colombia
Panamco Colombia, which operates throughout Colombia, reported net sales of
$278.9 million for the nine months ended September 30, 2000, down 5.8% from
the 1999 period. The revenue decline was mainly due to the devaluation of the
Colombian peso and to a 12.3% decrease in water volume to 25.7 million unit
cases, partially offset by a 0.6% increase in soft drink volume to 114.1
million unit cases. The water volume decrease was attributable to economic
recession and price increases mainly in individual-size presentations. Panamco
Colombia continued strengthening its position in the market, achieving a soft
drink share of sales of 67.9% during the first nine months of 2000.
Cost of sales as a percentage of net sales decreased to 42.5% for the first
nine months 2000 from 44.5% in the same period of 1999, as a result of cost
savings in raw materials.
Operating expenses, including facilities reorganization charges, as a
percentage of net sales increased to 58.4% during the first nine months of
2000 from 51.7% in the 1999 period,
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mainly due to Panamco's facilities reorganization charges of $18.2 million or
6.5% as a percentage of net sales.
Operating loss increased 122.7% to $2.6 million during the first nine months
of 2000 from operating income of $11.3 million in the 1999 period, primarily
as a result of lower sales and the facilities reorganization charges. Cash
operating profit decreased 10.7% to $49.5 million from $55.4 million in the
1999 period.
Net interest expense increased slightly during the first nine months of 2000
to $3.0 million from $2.9 million in the 1999 period, due mainly to an
increase in the average interest rate.
Other expense, net increased to $5.4 million for the nine months of 2000 from
income of $1.8 million in the 1999 period, primarily due to non-operating
charges of $2.5 million related to the disposal of non-operating assets and a
$1.6 million provision for contingencies.
The effective income tax rate increased to 33.4% for the first nine months of
2000 from 21.1% in the 1999 period, primarily due to the recognition of tax
credits recorded during the first quarter of 1999, which were not available in
the 2000 quarter.
As a result of the above, net loss attributable to the Company from Panamco
Colombia increased 193.4% to $7.2 million during the first nine months of 2000
from net income of $7.7 million in the 1999 period. This net loss was impacted
by facilities reorganization charges and non-operating charges totaling $14.2
million, net of the related tax benefit.
Venezuela
Panamco Venezuela reported net sales of $371.4 million for the nine months ended
September 30, 2000, down 0.2% from 1999. Devaluation of the Venezuelan bolivar
was not fully offset by price increases in local currency for the nine month
period. Total sales volume increased by 4.3% to 134.4 million unit cases, mainly
offset by the difficult economic conditions in Venezuela. Panamco Venezuela's
soft drink share of sales reached 68.5% during the first nine months of the
year.
Cost of sales as a percentage of net sales increased slightly to 46.0% during
the first nine months of 2000 from 45.1% during the same period in 1999, as a
result of higher costs associated with the increase in sales of nonreturnable
presentations.
Operating expenses, including facilities reorganization charges, as a
percentage of net sales increased to 61.4% during the first nine months of
2000 from 55.8% in the 1999 period, mainly due to facilities reorganization
charges of $30.9 million or 8.3% as a percentage of net sales, representing an
increase of 5.9 points versus the first nine months of 1999.
Operating loss increased 746.4% to $27.6 million from $3.3 million for the
first nine months of 1999, primarily as a result of the increase in facilities
reorganization charges. Cash operating profit decreased 8.7% to $46.4 million
from $50.8 million in the 1999 period.
Net interest expense increased during the first nine months of 2000 to $17.9
million from $12.8 million in 1999, mainly due to $2.0 million in costs
incurred in a $120.0 million hedging
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contract entered into on July 18, 2000 and an increase in the average variable
(LIBOR) interest rate.
Other income, net increased 44.6% to $3.2 million from $2.2 million for the
first nine months of 1999, primarily due to recognition of a tax credit
because of a favorable outcome of a claim and income received from sales of
returned packaging materials, offset by provisions for legal contingencies
related to prior years.
The effective income tax rate decreased to 8.5% during the first nine months
of 2000 from 54.8% in 1999. The increased rate during the first nine months of
1999 was primarily due to the asset tax or minimum tax paid in Venezuela as a
result of a net loss position before income taxes and our decision to
establish a valuation allowance on benefits of tax loss carry-forwards from
prior years, because of the uncertainty that we would generate sufficient
taxable income in the near term to offset against such benefits.
As a result of the above, net loss attributable to the Company from Panamco
Venezuela increased 81.0% to $38.8 million during the first nine months of
2000 from $21.4 million in the 1999 period. The net loss attributable to
Panamco for the first nine months of 2000 was impacted by facilities
reorganization charges and non-operating charges totaling $23.8 million, net
of the related tax benefit.
Central America
Panamco's Central American region includes franchises in Costa Rica, Nicaragua
and Guatemala. The region reported net sales of $165.1 million for the nine
months ended September 30, 2000, an increase of 5.1% from $157.1 million in
1999. The increase was attributable to price increases in dollar terms of
approximately 5.5%, partially offset by volume decline of 0.2% to 54.2 million
unit cases. Soft drink volume increased 1.3% to 51.8 million unit cases and
water volume was down 27.1% to 2.0 million unit cases, due to a change in
selling strategy for jug presentations. Panamco's share of sales increased to
94.1% in Costa Rica, 44.0% in Guatemala and 85.1% in Nicaragua during the
first nine months of the year.
Cost of sales as a percentage of net sales decreased to 45.9% during the first
nine months of 2000 from 46.8% in the same period of 1999, as a result of cost
savings in raw materials.
Operating expenses, including facilities reorganization charges, as a
percentage of net sales increased to 41.9% during the first nine months of
2000 from 40.6% during the same period of 1999, primarily as a result of
higher sales and distribution expenses and facilities reorganization charges
of $0.7 million or 0.4% as a percentage of net sales.
Operating income increased 1.5% to $20.1 million during the first nine months
of 2000 from $19.8 million in the 1999 period, primarily as a result of higher
sales and the initial benefits of the reorganization program. Cash operating
profit remained flat at $33.3 million for the first nine months of 2000
compared to the 1999 period.
Net interest expense decreased to $0.7 million for the first nine months of
2000 from $1.5 million in the 1999 period, due to a decrease in net debt and
improved financing conditions.
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Other expense, net decreased to $1.4 million for the first nine months of 2000
from $4.6 million in the 1999 period, mainly as a result of lower foreign
exchange losses in Nicaragua and Guatemala.
As a result of the above, net income contributed by Panamco Central America to
the Company increased 47.2% to $14.1 million during the first nine months of
2000 from $9.6 million in the 1999 period. Net income attributable to Panamco
for the first nine months of 2000 was impacted by facilities reorganization
charges and non-operating charges totaling $0.5 million, net of the related
tax benefit.
Liquidity and Capital Resources
At September 30, 2000, we had consolidated cash and cash equivalents of $147.4
million, a decrease of 3.4% compared to $152.6 million as of December 31,
1999. We have investments in bank deposits for $125.0 million and marketable
bonds amounting to $37.5 million, which guarantee bank loans obtained by
subsidiaries and are therefore classified as noncurrent investments.
Consolidated cash flow provided by operations was $207.9 million and $170.8
million for the nine months ended September 30, 2000 and 1999, respectively.
Total consolidated indebtedness was $1,273.3 million as of September 30, 2000,
consisting of $830.0 million at the holding company level and $443.3 million
of subsidiary indebtedness. Of the total debt, 86.6% is dollar denominated and
91.2% is long-term, with an average tenure of 3.1 years and average cost of
debt before taxes of 9.2%.
On December 9, 1999, the Board of Directors authorized a share repurchase
program for up to $100 million of our Class A common stock. We may repurchase
shares in the open market as well as in privately negotiated transactions
based on prevailing market conditions and other factors. We have repurchased
1,014,500 shares for $19.3 million at an average price per share of $19.05
since the beginning of the program in December 1999. During the nine months
ended September 30, 2000, we repurchased 645,916 shares for an aggregate of
$11.8 million at an average price per share of $18.22.
Total capital expenditures for the nine months ended September 30, 2000 were
$96.5 million compared to $149.1 million for the nine months ended September
30, 1999. This decrease resulted primarily from reduced capital spending.
On May 25, 2000, Panamco Brasil entered into a $30 million interest rate swap
hedging contract with Citibank, N.A. The contract includes a $10 million
interest rate swap at 19.7% per year with a one year expiration date and a $20
million interest rate swap at 19.7% per year with a one and a half year
expiration date.
On July 18, 2000, Panamco Venezuela entered into a $120 million cross-currency
swap hedging contract with Citibank, N.A. The contract includes a three year
$120 million currency swap, at U.S. LIBOR plus 4.05% per year, from the
Japanese yen to the U.S. dollar, out of which $50 million was converted into
Venezuelan bolivar, bearing interest at 29.5%, with a repricing option every
six months.
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In July 2000, Panamco Colombia issued unsecured promissory notes in local
currency equivalent to $32 million. These notes include a $15 million issuance
with a five year maturity and bearing interest at DTF (Colombian borrowing
rate) plus 2.75% and a $17 million issuance with a seven year maturity and
bearing interest at DTF plus 2.90% of which both issuances pay interest
quarterly. The proceeds from the debt issue were used to pay U.S. dollar
denominated debt.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no significant change in our exposure to market risk during the
nine months ended September 30, 2000. For a discussion of our exposure to
market risk, refer to Item 9A, Quantitative and Qualitative Disclosures about
Market Risk, contained in our Form 20-F for the year ended December 31, 1999.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Legal Proceedings information is addressed in Item 3 of our Form 20-F for the
year ended December 31, 1999. There has been no material change to that
information required to be disclosed in this Quarterly Report on Form 10-Q.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
As previously reported on the Company's Current Report on Form 8-K filed October
12, 2000, on October 6, 2000, the Company announced the appointment of William
G. Cooling as Chairman and Chief Executive Officer and Henry A. Schimberg as
Vice Chairman. The Company also announced the retirement of Chairman and Chief
Executive Officer Francisco Sanchez-Loaeza who has served the Company for 20
years, the last seven in his most recent capacity.
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As previously reported on the Company's press release dated November 1, 2000,
the Company is performing a comprehensive analysis of its cost structure as
well as its tangible and intangible assets, and will provide further guidance
on the fourth quarter of 2000 and for the 2001 year following the completion
of this analysis. This analysis is expected to be completed in December 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits - None.
(b) Reports on Forms 8-K - The Company did not file any reports on Form 8-K
during the three months ended September 30, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
November 14, 2000 PANAMERICAN BEVERAGES, INC.
(REGISTRANT)
By: /s/ Paulo J. Sacchi
--------------------
Paulo J. Sacchi
Senior Vice President
Chief Financial Officer and Treasurer
(On behalf of the Registrant and as
Chief Accounting Officer)
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